Best judgment assessment under sales tax rules upheld as valid, but void for breach of natural justice without hearing.

Rule 41(3) under the U.P. Sales Tax Act was valid as a machinery provision permitting provisional best judgment assessment for a quarter or month within the annual tax scheme, because it did not alter the nature of the charging provision. However, best judgment assessment proceedings remained quasi-judicial and were subject to natural justice. Where the assessing officer proposed to determine turnover under rule 41(3), the dealer had to be given a reasonable opportunity of being heard before the order was made; the absence of such hearing rendered the provisional assessments void, and a prior direction to deposit admitted tax did not cure the defect.

---

---

Issues: Whether rule 41(3) of the rules framed under the U. P. Sales Tax Act was ultra vires or otherwise invalid in so far as it authorised provisional best judgment assessment for a quarter or month, and whether a best judgment assessment made under that rule without giving the dealer a reasonable opportunity of being heard was void.

Analysis: The charging provision imposed liability on an annual basis, but the machinery provisions permitted periodical returns and provisional assessments for portions of the assessment year. Section 7-A and rule 41(3) were treated as supplementary to the annual scheme and not as altering the nature of the tax. Rule 41(3) was therefore not invalid merely because it contemplated quarterly provisional assessment. However, assessment proceedings remained quasi-judicial, and nothing in the Act or the rules excluded the application of natural justice. Where the assessing officer proposed to determine turnover to the best of his judgment under rule 41(3), a reasonable opportunity of hearing had to be afforded before the order was made. The absence of such an opportunity could not be cured by the mere fact that the dealer had been asked to deposit the admitted tax.

Conclusion: Rule 41(3) was upheld as valid, but the impugned provisional assessments were held void for breach of natural justice because no reasonable opportunity of being heard had been given.

---